The last time round where I bought so many CALL contracts was in December 2021 where I bought close to USD100,000 worth of LEAPS contracts. The LEAPS strategy has served me well and helped me made 6-figure returns in 2021, when we are in a great bull market.
However, in 2022 where the market is filled with uncertainties due to inflation, rising interest rate, quantitative tightening, I have since changed my strategies for 2022 to the Wheel Strategy and stopped buying LEAPS CALL contracts.
So, why did I buy 72 CALL option contracts now?
The reason is not because I am bullish on these stocks and using LEAPS/ CALL options to try to maximise my profits as the share price rises. The reason I am doing so, is to have a chance to clear my LEAPS positions, because they have been stuck for the past 4 months plus since the correction on tech stocks started. For an option contract, time is not on the side of the buyer. As time passes, the contract loses value each day.
The CALL option contracts have fallen in so much value, especially Meta (Facebook) and Palantir, that the premium that I will receive now (if I decide to sell) is 10% of what I have paid 6 months ago, when most of the tech stocks are at their all-time high. I have highlighted in another article the risks of buying LEAPS is that it can work both ways, LEAPS can magnify your gain as well as your loss. One of the mitigating ways that I mentioned in the article is to average down on my LEAPS if the share prices start falling.
After buying the 72 CALL contracts, I have managed to more than halved the average premium for each option contract that is expiring as soon as Sept 2022. Now, if the share price of these companies rises in the coming months, I will be nearer to the breakeven point as compared to the previous average premium price. My objective now is to clear my LEAPS/ CALL options contract soon and get back my capital with minimal loss so that I can reinvest the capital in other trade positions to increase my returns for 2022.
I have done this average down method succesfully for my Tesla CALL contracts as I bought to average down when Tesla’s share price was falling and when Tesla share price spiked up, I sold them all for a small profit.
Read more here:
[28 March 22 Trades] Why I Sold Away My 40 Tesla CALL Contracts After Stock Split News & What I Did Next?
This sharing comes with a risk that I may end up with a bigger loss if the share price of these companies continue to stay stagnant or drop in the coming months, all the way till expiration date. However, I thought it was worth risking an additional 10% loss of capital in order to have a higher chance of breaking even and regaining back the original capital.
I hope this sharing has been useful and I wish all of you a happy long weekend ahead.
***
Keen to learn about options trading but do not wish to pay for expensive courses, this newbie guide will help gain the knowledge and fundamentals to understand options better. And it’s totally free!
The Newbie’s Guide To Options Trading
The LEAPS Strategy has helped me make more than USD120,000 in 2021. Here’s all you need to know about this strategy that can help you increase your wealth exponentially:
The Ultimate LEAPS Options Thread
Looking for ideas on what stocks to invest in or which stocks to trade? You can take reference from what I have been buying or selling. I try to update them as soon as I can in this section, as well as share my thoughts behind executing these trades:
MY TRADES
If the bear market in 2022 is making feel depressed as your stocks come tumbling down, read this article to find out how you can use options trading to help you claw back some of your losses as you await market recovery:
How I Do Earn Even When The Stock Market Is Bearish?
Also, check out my trading strategies in different market conditions, whether it is bullish, bearish or volatile:
How Not To Lose Money In Trading? | My Trading Strategies For Bullish, Bearish And Volatile Market
I watched tons of videos on YouTube since 2020 and if you are wondering if there are any useful channels that you can subscribe to for learning market trends, TA, FA, check out this compilation here:
My Secret Weapons For Options Trading: I Watch These YouTube Financial Channels Every Day
I concluded my first year of options trading with more than USD160k of gain, see how I do it and the capital I use for every month to give you a sensing of the percentage yield I get out of my gains:
1st Year Options Trading Recap: The Journey Towards SGD$217,509 Profits In 2021
This blog is as authentic and as transparent as I can share, I do not just show the wins and hide the loss. I have made some very bad decisions in the first 8 years of investing and paid a huge price for them. Here is the loss I have accumulated during these years. I hope you learn some lessons from my mistakes.
I Cut $135,715 Worth Of Losses In The Last 1.5 Months
Want to learn more about Technical Analysis (TA) but find it difficult to grasp the concepts? This article brings you TA at a glance, and helps you understand key terminologies, indicators, and techniques used in TA to equip you with the knowledge that can empower you in your investing/ trading journey.
The Newbie Guide To Technical Analysis (TA)
Excited to start your trading journey or perhaps try out with a paper trading account to build your confidence in trading? Check out this step-by-step to help you get started:
How To Buy Options on Interactive Brokers (Step-By-Step)
Follow me on your favorite social media platforms, Facebook, LinkedIn, or Twitter, to get notified of my latest blog posts. Or join our investing/ trading community at Telegram to exchange ideas or ask questions relating to investing/ trading.
Learning Investment With Jason Cai 